Friday, 3 June 2005

Supply and demand different for illegal markets

If Californians were allowed to grow, sell, and use intrastate marijuana for medical purposes, Kleiman argues that the resulting reduction in demand for illicit marijuana would actually raise prices on the national marijuana market, rather than lower them as the textbooks would say. It's all to do with the dominant costs of your product, he argues, and when "the dominant cost facing any producer is the cost imposed by law enforcement" then the cost mechanisms are just a little different than normal.

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